Apartment rents up as vacancies drop across nation

Renters that have the desire and wherewithal to buy but are waiting for either lower prices or lower loan rates should consider this a warning.

Reis Inc. - a firm that tracks apartment vacancies and rents nationwide - reported this week that vacancy rates dropped in the fourth quarter of 2010 to the lowest point in two years going from 6.6 percent to 6.2 percent. At the same time a number of landlords are dropping freebies and have started raising rents. The average jump in the nation’s 82 biggest markets was 2.5 percent in the first quarter of this year.

This is happening at the same time interest rates are starting to show a steady although small, upward gain against the expected backdrop of a Federal Reserve move later this year to raise key interest rates in a bid to tighten the money supply.

That means housing prices - while they may continue to drop in some locations and in some price ranges in the coming months - will be offset by the higher cost of borrowing money plus an increase in the amount of money buyers are now going to have to put down to buy a home.

Sitting tight in an apartment also has a high likelihood of eroding your buying power.

All of this means that the days of the monthly cost of actually buying a home being cheaper than renting will eventually end. And it may be sooner than later than what some fence sitters think.